Each company we have profiled here, has been studied from the outside, based on what was on the public record at the time: accounts, filings, parliamentary and regulatory findings, academic research, contemporary press, and what the company said about itself while it was happening.
The lens is our framework, Meridian, which looks at a business the way you would look at a tree.
The results everyone watches sit in the canopy.
These are based on what sits below, in the roots and in the friction between the roots and the canopy.
So each profile finds and dates the one mechanism carrying the weight, shows how many years passed before the accounts agreed, sets the company against a competitor who met the same conditions and chose differently, and asks what an outsider could actually have seen at the time.
Some of these businesses held together and endured. Others came apart. They sit together on purpose, because the mechanism that protected one is usually the same one that failed in another.
Each one ends with something you can check in your own business this week. None of these companies is a client. We have never been inside any of them.
How Carillion’s dividend outlived its cash flow
On 9 June 2017, Carillion paid £54.4 million to its shareholders.
Thirty-one days later, it announced an £845 million provision against the value of its contracts, suspended the dividend and lost around seventy per cent of its market value over the announcement and the two days that followed.
The dividend had been proposed on 1 March. It was Carillion’s sixteenth consecutive annual increase.
The rise itself was almost ceremonial: from 18.25p to 18.45p a share, an increase of two-tenths of a penny. The announcement carrying it was headed “Performance in line with expectations”. It pointed to a pipeline of contract opportunities worth £41.6 billion, put revenue visibility for 2017 at 74 per cent and said the group had a good platform from which to develop the business in the year ahead. KPMG’s audit opinion on the 2016 accounts was dated the same day.
How Costco turned higher wages into lower costs
In April 2018, at a chamber of commerce lunch in Issaquah, Washington, Costco's then chief executive Craig Jelinek told a story against himself. He had once gone to the company's co-founder, Jim Sinegal, with a problem. "Jim, we can't sell this hot dog for a buck fifty. We are losing our rear ends." Sinegal's reply, as Jelinek recalled it, was short. "If you raise the effing hot dog, I will kill you. Figure it out."